dynasty trusts in Florida

A Complete Guide to Dynasty Trusts in Florida

Florida Dynasty Trusts: A Must-Have for High-Net-Worth Planners

When it comes to protecting generational wealth, high-net-worth individuals need advanced estate planning tools—and one of the most powerful instruments available today is the Florida dynasty trust. These trusts are designed not just to transfer wealth, but to preserve it down the generations by protecting assets from creditors and taxation. Here’s what you need to know.

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What Is a Dynasty Trust?

Dynasty trusts are irrevocable trusts designed to exist for many generations—potentially forever in some states. Unlike a typical trust that ends when the beneficiaries die, a dynasty trust can keep going, distributing assets to heirs according to the trust’s terms. Is 1000 years enough? That’s how long Florida allows its trusts to exist.

Its extended duration allows assets to be sheltered from taxes and creditors for centuries, making it an attractive vehicle for long-term wealth preservation. Here are the 3 major benefits of dynasty trusts in Florida:

Tax Benefits

The Internal Revenue Service imposes a federal estate tax on high-net-worth estates. The estate tax rate ranges between 18% to 40% and is imposed each time a generational transfer occurs, allowing the government to tax the same assets multiple times. Even though the estate tax exemption amount is currently $13.99 million per person (and set to increase to $15M per person in 2026), wealth that would be placed in such a trust would likely increase beyond these amounts over the long-term. 

Dynasty trusts help minimize long-term tax exposure. Assets placed in your trust are removed from your taxable estate, avoiding federal estate taxes and potentially generation-skipping taxes each time they are passed to a new generation. If properly structured, appreciation on assets inside the trust grows free from these transfer gift taxes, allowing wealth to accumulate more efficiently. 

Leveraging lifetime gift tax exemptions when funding the trust can further enhance its tax-saving potential. Of course, we don’t have a state income tax, so the income earned by a dynasty trust in Florida isn’t subject to additional state-level taxation.

Asset Management

With a Florida dynasty trust, asset management is centralized and continuous across generations. The appointed trustee—often a corporate fiduciary or trusted advisor—handles all investment decisions, ensuring the assets are prudently managed in accordance with the trust’s terms. This centralized oversight allows for consistency in strategy, risk management, and compliance with fiduciary duties. 

The trust can also incorporate investment mandates, philanthropic goals, or other directives from the grantor. This level of long-term professional oversight ensures the trust’s value is preserved and grown responsibly for current and future beneficiaries.

Creditor Protection

Robust creditor protection is a key feature of Florida dynasty trusts. Assets held in the trust are not legally owned by the beneficiaries and are generally shielded from lawsuits, divorces, bankruptcy claims, or other creditor actions. It is important to note that child support, alimony, and taxes are “exception creditors” to these trusts. 

Families concerned about financial instability, litigation risks, or complex family dynamics can create certain provisions to block both voluntary and involuntary transfers of a beneficiary’s interest. This protection remains in place for as long as the assets stay in the trust, offering a secure legal fortress for family wealth.

What Should I Consider Before Setting Up a Florida Dynasty Trust?

Establishing a dynasty trust is a significant decision that requires careful thought and expert guidance. Below are key considerations when creating Florida dynasty trusts:

Florida Dynasty Trust Rules

Florida law is particularly favorable for dynasty trusts because of the changes to the Rule Against Perpetuities. As of 2025, any trust governed by Florida law and administered within the state can remain in effect for up to 1,000 years. 

Additionally, Florida doesn’t impose state income tax on trust income, which can result in significant tax savings over time. However, other states may try to claim jurisdiction over beneficiaries who reside elsewhere, so careful drafting and planning are essential.

Which Assets to Transfer

Not all assets are equally suited for a dynasty trust. Commonly transferred assets include:

  • Cash
  • Marketable securities
  • Real estate
  • Life insurance policies
  • Closely held business interests

When deciding what to contribute, consider assets that are likely to appreciate in value, as this can maximize the tax advantages of the trust. It’s important to appraise and transfer assets at fair market value to avoid unintended tax consequences.

Again, the recent passage of the One Big Beautiful Bill Act has created many other planning opportunities to use with dynasty trusts.

How and When to Fund the Trust

Timing is crucial. Many planners choose to fund a Florida dynasty trust during their lifetime to take advantage of estate and gift tax exemptions, which are subject to change.

You can fund the trust using your lifetime gift tax exemption or wait until death and fund it via your will or a revocable living trust. The earlier you fund the trust, the more time the assets have to grow outside of your taxable estate.

You’ll also need to ensure the proper documentation and titling of assets to the trust. A trusted estate planning attorney can prevent missteps that could trigger taxes or invalidate your plan.

How Assets Will Be Distributed

The beauty of a dynasty trust lies in the grantor’s ability to dictate how and when beneficiaries receive distributions. You can:

  • Stagger distributions at certain ages
  • Tie distributions to life events (such as graduation or marriage)
  • Appoint a trustee to make discretionary distributions
  • Include “spendthrift” provisions to preserve assets

With Florida dynasty trusts, flexibility and control can be built into the trust, allowing for tailored distribution strategies that align with your family’s values and needs.

Who Will Be Your Trustee

It’s vital that you select the right trustee. This person will manage investments, ensure legal compliance, and make discretionary decisions about distributions for generations to come.

Options include:

  • A trusted family member (with caution due to potential conflicts)
  • A corporate trustee (like a bank)
  • A hybrid approach (co-trusteeship or a trust protector overseeing the trustee)

Given the long duration of a dynasty trust in Florida, many people opt for institutional trustees with experience and continuity. A corporate trustee may have a better handle on tax efficiency, including tax-loss harvesting with trust assets. You may also consider naming a trust protector—a third party with the power to amend the trust, remove trustees, or resolve disputes.

Benefits of Having a Florida Estate Planning Attorney Draft Your Documents

While there are many online estate planning templates available, drafting a Florida dynasty trust is not a DIY project. Here’s why hiring a qualified Florida estate planning attorney is essential:

  • State-Specific Expertise. Florida has unique rules governing trusts, taxation, and property law. An experienced attorney understands these nuances and ensures your trust complies with Florida statutes while taking full advantage of its favorable trust laws.
  • Tailored Drafting. No two families are the same. A skilled attorney can customize your dynasty trust in Florida to meet your family’s financial goals, values, and dynamics. Whether you want to incentivize education, avoid future disputes, or address special needs beneficiaries, your attorney can craft language that reflects your wishes.
  • Tax Efficiency. Improper drafting or funding can trigger estate or gift tax liabilities. An attorney ensures your plan works within the bounds of current tax law and incorporates strategies to reduce long-term tax exposure for your heirs.
  • Long-Term Support. Estate planning is not a one-and-done task. Laws change, families evolve, and asset portfolios shift. Having a relationship with a Florida estate planning attorney ensures your trust remains up to date and effective.
  • Coordination with Other Advisors. Trusts do not operate in isolation. A Florida estate planning attorney can coordinate with your financial advisors, CPAs, and insurance professionals to create an integrated wealth preservation strategy.

There’s no point creating a long-lived trust if you haven’t taken all the steps to secure the assets in it. It’s never a bad call to have an attorney look over your documents—but having one prepare and file them is even better. Email us at hello@yolofskylaw.com today to learn how to protect your lifetime of work.